E-commerce hub Hangzhou fines top online influencers for tax evasion amid live-streaming crackdown

The Hangzhou tax authority said Zhu Chenhui and Lin Shanshan illegally filed personal wages as company income, evading more than US$6.5 million in taxes

The fines come as Beijing has been cracking down on tax evasion and the booming live-streaming e-commerce industry, limiting what can be sold

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A host introduces products during a live broadcast in Yiwu, in eastern Zhejiang province, on February 8. Live streaming has become a popular way of selling goods on e-commerce platforms like Taobao, but its rapid rise has come with regulatory scrutiny. Photo: Xinhua

Published: 5:00pm, 22 Nov 2021Updated: 8:59pm, 22 Nov 2021

Hangzhou, China’s eastern e-commerce hub that is home to Alibaba Group Holding, has levied hefty fines on two popular live-streamers for tax evasion, signalling greater scrutiny of live-streaming e-commerce amid a broader crackdown on the booming industry.

The Hangzhou tax authority fined Zhu Chenhui, known as Xueli Cherie online, and Lin Shanshan 65.5 million yuan (US$10.3 million) and 27.7 million yuan, respectively, for declaring personal wages as income for sole proprietorships, according to a statement released on Monday by the Zhejiang Provincial Tax Service, under the State Taxation Administration. Under Chinese law, some high earners face higher tax rates than companies.

The move is not the first in China, but it shows how local governments are taking a tougher stance on the live-streaming industry. For many of China’s 1 billion internet users, live streaming became a popular medium for shopping during the Covid-19 pandemic, turning platforms like Douyin, the Chinese version of TikTok that is also owned by ByteDance, into rivals of more traditional e-commerce platforms like Alibaba’s Taobao. Alibaba is the owner of the South China Morning Post.

Chenfan founder Zhu Chenhui was among the top three live-streaming hosts on Taobao in 2020. Photo: Handout

Both live-streamers work for Hangzhou Chenfan Clothing, founded by Zhu. Company strategist Li Zhiqiang is also being investigated for helping plan and execute the tax evasion, which the statement said was uncovered using big data analysis. Each live-streamer was ordered to pay twice the amount of unpaid taxes in addition to other fines.

“The tax services have also found through big data that other influencers may have evaded taxes, and these individual cases are being investigated currently,” the notice said.